Johannesburg - The JSE pared earlier gains late on Thursday‚ once initial optimism faded after central banks in Europe and China cut interest rates to spur growth‚ and upbeat US employment data were released.
The European Central Bank (ECB) cut rates by 25 basis point to a record low of 0.75% and also cut its deposit rate to zero in an attempt to spur eurozone growth. The Bank of England (BoE) monetary policy committee raised its asset-purchase target by GBP50 billion to GBP375 billion.
China earlier on Thursday said its one-year lending rate would fall by 31 basis points and the one-year deposit rate would drop by 25 basis points from tomorrow. These cuts were done after the world’s second biggest economy’s manufacturing data reached a seven-month low.
“We had a bit of a bumpy ride after starting off higher. There was initial optimism in the market‚ but we drifted lower after a lot of good news. China dropped rates which boosted commodity prices and local resources stocks. Then the ECB announced rate cuts as was expected and it was quite positive for markets. The US released better than expected private-sector job hiring figures‚” said Andrew Bryson‚ trader at BoE Stockbrokers.
On Friday all eyes will be on the mother of all economic data‚ the US government’s monthly jobs report‚ which reports non-farming payroll figures.
At 16:51 local time‚ the JSE All Share [JSE:J203]
index was up 0.54% to 34 223.35 points‚ with resources and gold shares gaining 0.26% and 1.79% respectively‚ and platinum counters adding 1.01%.
Financials gained 0.56%‚ banking stocks added 0.55% and industrials gathered 0.68%.
The rand was trading at 8.12 to the US dollar‚ from 8.14 at the JSE’s close on Wednesday‚ while gold was trading at $1 610.42 a troy ounce from $1 614.79/oz at the JSE’s previous close and platinum was quoted at $1 475.50/oz‚ from $1 483/oz previously.
By 13:00 GMT‚ with all the policy announcements out of the way‚ European stocks were in the doldrums.
The benchmark Stoxx 600 index was down 0.1% at 257.19. The UK’s FTSE 100 was up 0.1% at 5 688.98‚ Germany's DAX was down 0.5% at 6 530.26 and France's CAC-40 was 0.7% weaker at 3 244.11. Comments by ECB President Mario Draghi did not help the tone‚ Dow Jones Newswires reported. Speaking at the post-rate announcement press conference‚ he said the ECB saw growth weakening in all euro-area members.
The trio of global central bank stimulus measures and a pair of better-than-expected readings from the US labour market failed to prop up stocks in the US. The Dow Jones Industrial Average fell 63 points‚ or 0.5%‚ to 12 879 as trading resumed on the heels of the Independence Day holiday. The Standard & Poor's 500-stock index dropped six points‚ or 0.4%‚ to 1 367‚ and the Nasdaq Composite declined eight points‚ or 0.3%‚ to 2 967.